The latest policy trends of higher education institutions (HEIs) have increasingly highlighted the importance of external stakeholders' expertise and resources. This paper investigated how the third mission through teaching and research and development (R&D) at Finnish universities of applied sciences (UASs) is influenced by the structural development policy. Finnish structural development aims to increase the positive external impacts of HEIs by initiating changes to their organizational structures and operations. The findings suggest that structural development and the ministry behind the policy are powerful, shaping both external stakeholder engagement and internal working environments in UASs. The UASs implemented immediate strategic responses to the policy. The high priority of the structural development policy seems to be the result of survival thinking inside the UASs and not always of the academic appropriateness or desirability of the actions of this policy. The findings of this study suggest the institutionalization of regional mandates for UASs by linking teaching and R&D to confront various challenges.